On Friday, June 18, 2004, at 1:00pm CDT
the Iowa Electronic Market (IEM) will open trading in a market based the
composition of the US Senate after the 2004 U.S. elections.
This document describes that market and should be viewed as a supplement to the
Trader's Manual. Except as specified in this prospectus, trading rules for
this market are the same as those specified in the Trader's Manual for the
Iowa Electronic Market.

Contract liquidation values in this winner-takes-all Senate Control Market
will be determined by whether the Republicans increase the number
of seats they hold in the Senate, maintain an absolute majority
but do not increase their lead, or lose the absolute majority.
The outcome of the U.S. Presidential election and the party
of the elected vice-president will not affect the payoffs in this market.
The contract that represents the actual outcome of the election
will have a liquidation value of $1.00. All other contracts will
expire worthless.

CONTRACTS

The financial contracts initially traded in this market are:

Code

Contract Description

RS.gain

Republicans win more than 51 Senate seats

RS.hold

Republicans win 51 Senate seats

RS.lose

Republicans win 50 or fewer Senate seats

The contract RS.gain represents the outcome that Republicans
increase the number of seats they now hold in the Senate; that is,
Republicans hold more than 51 Senate seats after the election.
The contract RS.hold represents the outcome that Republicans
maintain an absolute majority in the Senate, but do not increase
their control; that is, Republicans hold exactly 51 Senate seats.
The contract RS.lose
represents the outcome that Republicans lose an absolute majority
in the Senate (hold 50 or fewer Senate seats).

DETERMINATION OF LIQUIDATION VALUES

This market is a
winner-takes-all market. The contract that denotes the actual
outcome of the election will have a $1.00 liquidation value; all
others will expire worthless. For example, if as a result of the
November 2, 2004 elections, Republicans hold 51 Senate seats, the
contract RS.hold will pay off $1.00 and the contracts RS.gain and
RS.lose will each expire worthless.

The New York Times will be our official source of election
results. For purposes of determining payoffs, we will use the
composition of the Senate as determined by each member's
party affiliation at the time of the election. For
newly elected Senators, this will be their party affiliations as
shown on the election ballot. For Senators not standing
for re-election, this will be their party affiliations as reported
in the most recent Congressional Quarterly Weekly Report at
the time of the election. In the
event that the election is delayed or postponed, liquidation will take place
in a timely fashion after the close of polling sites for the popular vote.

Liquidation formulas can be viewed by first selecting Display
Options and then choosing Liquidation Formulas.

The judgment of the IEM Directors will be final in resolving
questions of interpretation and typographical or clerical errors.

CONTRACT SPIN-OFFS

The Directors of the IEM reserve the right to introduce new contracts to
the market as spin-offs of existing contracts. When a contract spin-off occurs,
an original contract will be replaced by new contracts which divide the
payoff range of the original contract into sub-intervals. No holder of the
pre-spinoff contracts will be adversely affected. Traders will receive the
same number of each of the new contracts as they held in the original, and
the sum of the liquidation values of the new contracts will equal the
liquidation value of the original. Decisions to spin-off a contract will be
announced at least two days in
advance of the spin-off. The new contract names, the specifications
regarding liquidation values and the timing of the spin-off will be included
in the announcement. This announcement will appear as an Announcement on your
WebEx login screen.

CONTRACT BUNDLES

Fixed price contract bundles consisting of one share of each of the contracts
in this market can be purchased from or sold to the IEM system at any time.
The price of each fixed price contract bundle is $1.00.
Because exactly one of the listed U.S. Senate compositions will result
from the election, the total payoff from holding a fixed price contract bundle
until the market closes is $1.00.

To buy or sell fixed price contract bundles from the system, use the
"Market Orders" option from the Trading Console. Select "Senate04
(buy at fixed price)" from the Market Orders list to buy bundles.
Select "Senate04 (sell at fixed price)" to sell bundles.

Bundles consisting of one share of each of the contracts in this market may
also be purchased and sold at current aggregate market prices rather than the
fixed price of $1.00. To buy a market bundle at current ASK prices, use
the "Market Order" option as above but select "Senate04 (buy at market prices)."
To sell a bundle at current market BID prices, select
"Senate04 (sell at market prices)."

Bundle purchases will be charged to your cash account and bundle
sales will be credited to your cash account.

MARKET CLOSING

This market will remain open until contract liquidation. Liquidation values
will be credited to the cash accounts of market participants.

MARKET ACCESS

Current and newly enrolled IEM traders will automatically be given access
rights to the
2004 Senate Control Market. Access to this market is achieved by logging into
the IEM and choosing "Senate04" from the Navigation Bar.

Funds in a trader's cash account
are fungible across markets so new investment deposits are not required.
Additional investments up to the maximum of $500 can be made at any time.
New traders can open accounts using the IEM
OnLine Account Application page at https://iemweb.biz.uiowa.edu/signup.
There is a one-time account registration fee of $5.00, and
investments are limited to the range of $5.00 to $500.